Transpar Transportation Ltd. (TTL) is a Canadian public company that operates primarily in the commercial and recreational
Question:
Transpar Transportation Ltd. (TTL) is a Canadian public company that operates primarily in the commercial and recreational transportation sector. The commercial transportation business worldwide is growing strongly, fueled in part by rapid rates of urbanization. Traffic congestion, pollution and commuting times are rising in major cities. Rail transportation represents an efficient, cost effective solution to these problems. Analysts expect that the global passenger rail equipment market will grow at a compounded annual rate of more than 5%. Constraints on government ability to finance new transportation systems have resulted in the contracting of services to private companies such as TTL
TTL has three divisions. The rail and transit operation offers a full range of urban, suburban, and intercity vehicles as well as complete rail transit systems.
The recreational products division designs, builds, and distributes personal recreational transportation vehicles such as snowmobiles and watercraft. The capital services division oversees the financing activities for the company and provides secured financing for customer purchases of recreational product inventories and railcar leasing and management services for commercial customers. ;
Despite an uneasy economy, TTL has expanded its operations considerably in fiscal year 2005. This expansion is consistent with management's published objective to double the corporation’s revenues, profits, and earnings per share over the next five years.
It is now June 2005 and TTL’ fiscal year ends on September 30. You, CA, have recently accepted the position as assistant to the chief financial officer of TTL, Dave Butler. Your duties at TTL include overseeing the external reporting process and coordinating the external audit function.
TTL is an audit client of Rankin & Rankin (R&R), your previous employer. Mr. Butler has scheduled a meeting with the R&R audit partner and manager. In preparation for this meeting, Mr. Butler has asked you to prepare a report that discusses the major accounting and audit issues that might arise during the meeting.
Mr. Butler has provided you with information about new developments in the company’s three divisions (Exhibits A, B, and C). Mr. Butler would also like to know what information should be gathered to help the audit go as smoothly as possible. He is hopeful that your previous experience as an auditor at R&R will help reduce disagreements (that have been a problem between management and the auditors) and the current year’s audit fee.
Required:
Prepare your report for Mr. Butler.
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